Abu Dhabi’s Masdar delayed a planned $2.2 billion hydrogen power project and scrapped a solar module manufacturing facility in Abu Dhabi, a senior company official said on Tuesday.
The hydrogen power project was a 60:40 joint venture with BP and was linked to carbon capture and storage.
“It has been pushed back. It is a very long-term and very complex project. We are awaiting approvals from the government,” Frank Wouters, head of power at Masdar, told reporters on the sidelines of a conference.
Wouters declined to say why the project was delayed.
A source familiar with the matter told Reuters the sticking point was negotiating prices for the carbon dioxide and electricity produced at the hydrogen plant with its two main customers: Abu Dhabi National Oil Company (Adnoc) and Abu Dhabi Water Electricity Authority (Adwea).
“Unless this issue is resolved, the project cannot take off and completion will be delayed,” he said on condition of anonymity.
Last year, the general manager of Hydrogen Power told Reuters the project would be completed in 2014 and preliminary engineering and design was completed by Foster Wheeler. The project was to be tendered in 2010, he said.
A BP spokeswoman confirmed the project has been delayed but said the company will continue to work with Masdar.
While the project awaits the decision of the Abu Dhabi government, the joint venture must responsibly manage its ongoing costs and redeploy some of BP and Masdar resources, a statement from BP said.
Separately, a thin film solar module manufacturing plant at Taweelah, near Abu Dhabi has been canceled due to lack of scale and market demand.
“If markets change again, we will look at manufacturing in the UAE,” he said.
However, Masdar’s overseas projects in Britain, Spain and Germany are progressing, he said.
“The cost of generation of power from the projects is higher than tariffs customers will pay,” said a Dubai-based energy analyst.
“Unless the government wants to subsidize green energy which it may not, the projects are not commercially viable.”
Still, Abu Dhabi, among the world’s top oil producers, is pushing ahead with investing and developing renewable energy, aiming for renewables to account for 7 percent of total power supply by 2020.
Electricity demand is growing rapidly in the UAE due to population growth and diversification of the economy into industry, infrastructure, real estate and tourism.
Last year, Masdar announced the completion of its zero carbon emissions city has been delayed until 2025, following a review process after it took into account market and technology developments. The first phase of the $22 billion project has been delayed by two years to 2015.
